Cincinnati shoppers can finally get their Kroger groceries delivered to their homes after years of waiting for the locally based grocer to offer that service.
There’s one catch: Kroger (NYSE: KR) isn’t providing the home delivery itself. Bryan Melendez launched Grocery Runners three weeks ago to capitalize on Kroger’s popularity in the local market and its online shopping tool known as ClickList.
“Nowadays almost everything can be home delivered, so why not groceries?” Melendez asked me in an exclusive interview. “I’m a single dad who shares custody and time is a valuable commodity. It seemed like there’s a market for it.”
Home delivery has been a hot button issue in the grocery business for the past year or so. Kroger added online ordering and customer pickup service two years ago when it bought North Carolina-based Harris Teeter Supermarkets Inc. It has added its own online order and customer pickup service, based partly on Harris Teeter’s model, and now offers it in at 11 stores in Greater Cincinnati and at least 20 across its chain. Amazon.com expanded its AmazonFresh home grocery delivery service in several markets on the East and West coasts about two years ago. Kroger has offered home delivery in Denver for several years, but it hasn’t expanded beyond that market because of logistical issues and its view that customers aren’t asking for it as much as the pickup model that gives them more flexibility.
But Melendez is banking on the demand for more convenience and using Kroger’s online ordering as the foundation. Customers simply order through Kroger’s ClickList service as they normally would. But instead of picking it up themselves, Grocery Runners does the legwork. It picks up the orders in the time slots customers request and delivers them to their door. Delivery hours run 8 a.m.-9 p.m. seven days a week.
Melendez charges $10 an order plus 4 percent of the total cost of the grocery order, so a $100 order costs $14 to deliver. Add Kroger’s ClickList fee of $4.95 per order – it’s cheaper if you pay monthly or annually – and you’re getting groceries delivered to your home for about $19.
Delivery is limited for now to five ZIP codes on the east side of the city, encompassing mostly Columbia-Tusculum, Hyde Park, Oakley, Fairfax, Madisonville, Norwood and Pleasant Ridge. ZIP codes include 45208, 45209, 45212, 45226 and 45227. For a map, click here. He uses the new Marketplace Kroger in Oakley for the ClickList pickups.
Melendez is based in West Chester, but he chose to start in those markets because they’re compact, densely populated and have “more early adopters.” They have disposable income, too.
For the rest of the region, take heart. Melendez plans to expand across Greater Cincinnati within about six months.
“We’re running a pilot program now to test it and prove there is a niche for this service,” Melendez said.
He’s only been operating for three weeks – Melendez launched the service on Jan. 4 – but he’s already determined from customers that there’s a need.
“I cannot describe how positive we’ve been received,” he said.
Melendez hasn’t started serious marketing efforts yet. He has done door hangers in target neighborhoods. He’ll likely add direct mail.
Assuming the service does well in Cincinnati, he hopes down the road to expand to surrounding cities that are significant Kroger markets, such as Dayton, Columbus and Louisville.
Melendez, 45, has worked in the radio business for 25 years. He grew up in Puerto Rico, his dad’s native land. His mom is from Cincinnati. After his dad died, she moved back home. Melendez moved to Cincinnati to be near her for a few years around that time in the early 1990s, when he worked for Jacor Communications. He later worked mostly in Spanish-language radio in various cities before moving back to Cincinnati in 2008. But he's done plenty of traveling as a consultant the last several years.
“I think I’ve paid my dues in the rat race corporate world,” he said. “I love radio, but I was itching to spend time with my son, to not travel so much and to own my own business.”
Grocery Runners has “no affiliation whatsoever” with Kroger. Melendez said he makes that clear to customers. He restricts the service to Kroger groceries mainly because it has the ClickList online order and pickup service.
“And I like Kroger and it’s the dominant player in the market,” he said. “I’m not anti-other chains, but I haven’t given serious thought to adding others.”
Kroger has greater than 50 percent market share in Greater Cincinnati.
Kroger is taking no position on Grocery Runners. Keith Dailey, spokesman for the Cincinnati-based supermarket giant, said Kroger is not promoting it and doesn’t have an opinion on it.
“We are focused on growing our digital connection with our customers, whether they choose to shop in-store or order online,” he said. “We continue to expand our ClickList service to more locations, which is helping us learn a lot and generate feedback from customers about the convenience of being able to order online and pick up at their local store.”
Kroger could view it as an easy way to test the market for home delivery without devoting any resources to it. Grocery Runners' exclusive offering of products from Kroger could help the grocer’s business, too. Or Kroger could view it as a company treading on its turf. And whether Melendez does a good job or not, it’ll likely reflect on Kroger in the eyes of some customers who don’t distinguish one from the other.
Melendez said he hasn’t heard from Kroger.
“We hope they view this positively,” he said. “We’re happy to be the guinea pig.”
He’s well aware that if Kroger decides to offer its own home delivery service, he’s probably out of business.
“That could be our instant death card,” he said. “That’s definitely a concern, but it’s a risk worth taking. We hope to do a good enough job that they might consider partnering with us.”
He acknowledges that the possibility of Kroger buying him out has crossed his mind, too.
Melendez, the sole founder, is the only employee for now. But in the next few days he expects to have four or five employees to help him with pickup and delivery.
He raised money from family and friends to get the business off the ground. He wouldn’t give specifics.
“It was more than I’d like,” he said with a laugh.